The Bitcoin long/short ratio has risen again, indicating growing trader interest in long positions amid elevated levels that have persisted for months. Analytics platform Alphractal notes this anomaly breaks historical buy signals, with leveraged traders potentially delaying recovery.
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Bitcoin’s long/short ratio exceeds altcoins’ levels, typically a strong buy signal now disrupted.
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Supply in profit dropped from 19 million BTC to 13.5 million BTC, mirroring 2022 bearish setups.
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Weekly price action shows bearish structure shift; bounce to $101k-$103k resistance possible before potential bear market.
Bitcoin long/short ratio rises amid elevated levels signaling trader bets on upside, but no profits yet. Explore supply in profit metrics and cycle similarities for recovery or bear hints. Stay informed on BTC trends today.
What Does the Rising Bitcoin Long/Short Ratio Mean?
Bitcoin long/short ratio tracks the proportion of long to short positions among traders, with increases signaling bets on price rises. Analytics platform Alphractal highlighted in a post on X that this ratio elevated once more, reflecting heightened long interest. However, its multi-month persistence without price gains marks a departure from norms, where BTC’s ratio above altcoins’ has historically triggered buys.
How Are Leveraged Traders Impacting Bitcoin Recovery?
Founder and CEO of Alphractal, Joao Wedson, observed that leveraged traders are hampering recovery efforts. Typically, an elevated long/short ratio above altcoins serves as a clear buy signal for Bitcoin, delivering profits. This pattern held reliably until recent months. The ongoing elevation without follow-through profits suggests over-leveraged positions are stifling upside momentum. Data from Alphractal shows the ratio’s anomaly coinciding with stalled price action, underscoring leverage’s drag on market dynamics.
Will We See a Bitcoin Recovery or Bear Market?
Analyst Axel Adler Jr outlined key triggers for a Bitcoin trend reversal. Bitcoin supply in profit peaked at 19 million BTC in October before declining to 13.5 million BTC. The 30-day simple moving average (SMA) and 90-day SMA of supply in profit show a 1.75 million BTC gap, echoing 2022 conditions that preceded an extended bear phase.
To avert a repeat, bulls must maintain prices in the current range, keeping supply in profit above the 30SMA. Adler notes the gap narrows by 28,000 BTC daily. Persisting dynamics project a bullish crossover in late February or early March, valid only if Bitcoin holds above $75,000-$80,000 in January.
Examining Bitcoin Price Action Similarities Across Cycles
Source: BTC/USDT on TradingView
In 2021, Bitcoin’s weekly structure turned bearish upon falling below key moving averages, signaling a long-term trend shift. A brief bounce to the 50-week moving average occurred before the full bear market ensued. Current charts reveal a parallel setup: a weekly bearish structure shift and drop below weekly averages. Analysts anticipate a potential bounce to the $101,000-$103,000 resistance zone.
A sustained drop below $75,000 in January could cement bear market conditions. These cycle similarities highlight recurring patterns in Bitcoin price behavior, driven by technical indicators and on-chain metrics like supply distribution.
Frequently Asked Questions
What is the Bitcoin Long/Short Ratio and Why is it Elevated?
The Bitcoin long/short ratio measures long positions versus shorts on exchanges. Alphractal reports it has stayed elevated for months, surpassing altcoin ratios—a historical buy signal. Recent lack of profits stems from leveraged trading pressures breaking this pattern.
Can Bitcoin Avoid a Bear Market in 2025?
Yes, if prices hold above $75,000-$80,000 in January. Axel Adler Jr projects a bullish supply-in-profit crossover by late February if the 1.75 million BTC gap closes steadily at 28,000 BTC daily, preventing a 2022-like downturn.
Key Takeaways
- Elevated Bitcoin long/short ratio: Anomaly persisting months without profits, influenced by leveraged traders per Alphractal’s Joao Wedson.
- Supply in profit metrics: Down to 13.5 million BTC; holding above 30SMA key to avoiding bear phase like 2022.
- Price action watch: Monitor bounce to $101k-$103k; sustain below $75k risks deeper correction.
Conclusion
The rising Bitcoin long/short ratio and declining supply in profit underscore pivotal market dynamics, with leveraged positions and historical cycle parallels raising caution. Holding key support levels could pave the way for recovery. Monitor these indicators closely as Bitcoin navigates potential volatility ahead.
Source: https://en.coinotag.com/bitcoin-bear-market-looms-if-price-fails-75k-support-in-january
